2014 (12) TMI 1032 - AT - Central Excise

Clandestine removal of goods - Lack of evidences - Cross examination opportunity not given - Held that - Even though the Commissioner has concluded that there was such removal of huge quantity of finished products, there is no discussion or evidence available to show excess consumption of raw materials, electricity, etc. No statement of people concerned with production has been recorded. The whole case is based on loose sheets recovered from the house of Shri Manoj Mitulal. These sheets belong to Shri Sohanraj Mehta according to the Revenue. However, no statement has been recorded from Shri Manoj Mitulal at all. He was not made available for cross examination also. The whole case depends upon the interpretation of loose sheets and the version of Shri Sohanraj Mehta which was changed several times during the period and unless the cross-examination of the persons was allowed, the appellants could not defend the case properly. What is required to be proved by the department is preponderance of probability and therefore we need to examine whether on the basis of evidence collected and investigations done, a case has been made out against the appellant or not and we are not required to examine what are the omissions in the investigation. We find that in the impugned order there is no mention of surprise visits of the officers and the supervision/control exercised by the department and how the assessee could produce excess quantity in spite of such intense supervision. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Alleged clandestine removal of goods without payment of duty.
2. Central Excise duty liability.
3. Redemption fine and penalties imposed on various individuals.
4. Need for remand and fresh adjudication.

Issue 1: Alleged Clandestine Removal
The judgment revolves around the alleged clandestine removal of 57085 cartons of RMD gutkha by the appellant without payment of duty. The Central Excise authorities initiated investigations based on records seized during an Income Tax raid. The impugned order held the appellant liable for confiscation and imposed a significant duty amount along with penalties on multiple individuals associated with the company.

Issue 2: Central Excise Duty Liability
The judgment determined a substantial Central Excise duty liability of &8377; 26,57,29,571/- on the appellant, M/s. Dhariwal Industries Ltd. Additionally, a redemption fine of &8377; 2.6 crores was imposed in lieu of confiscation. Penalties ranging from &8377; 50 lakh to &8377; 1 lakh were also levied on various individuals connected to the company.

Issue 3: Redemption Fine and Penalties
Apart from the duty liability, a redemption fine of &8377; 2.6 crores was imposed on the appellant. Furthermore, penalties were levied on individuals including the Chairman, Managing Director, C & F Agent, and other employees/part of management of the company, ranging from &8377; 50 lakh to &8377; 1 lakh, based on their roles in the alleged clandestine removal.

Issue 4: Need for Remand and Fresh Adjudication
The judgment highlighted the need for remanding the matter for fresh adjudication due to various discrepancies and lack of conclusive evidence in the investigation. The Appellate Tribunal found it necessary to examine the evidence in detail and requested the Commissioner to consider all submissions, record observations, and reach a conclusion in accordance with the law. The appellant was directed to deposit an amount of &8377; 40,00,000/- within eight weeks for further adjudication. Other individuals facing penalties were also granted the opportunity for a fresh hearing without a deposit requirement.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT Bangalore showcases the complexities involved in the case of alleged clandestine removal of goods and the subsequent duty liabilities, fines, and penalties imposed on the appellant and associated individuals. The decision for remand and fresh adjudication underscores the importance of thorough examination and consideration of evidence in such cases to ensure a just and fair outcome.